Archive - Mar 3, 2014

Russia has lashed out following comments from US Secretary of State John Kerry:

• *RUSSIA SAYS KERRY THREATS ARE `UNACCEPTABLE'
• *RUSSIA SAYS KERRY ISN'T ANALYSING SITUATION IN UKRAINE
• *KERRY IS USING COLD WAR SLOGANS, RUSSIA FOREIGN MINISTRY SAYS
• *U.S., ALLIES IGNORED VIOLENCE, RUSSOPHOBIA IN UKRAINE PROTESTS

In addition, EU ministers debate freezing the assets of Ukrainians responsible for corruption and "targeted measures" against Russia if no change of course is undertaken.

Following a 150bps rate hike by the central bank - the largest since the 1998 default -desperate to halt capital outflows and a collapsing currency, Russian stocks have crashed led by some of the country's largest banks. USDRUB rose to just shy of 37 - the weakest RUB rate on record - but rallied back a little on the rate hike but the MICEX stock index tumbled 11% to almost 2-year lows with Sberbank (Russia's largest bank) down 17% and VTB (2nd largest bank) down 20%. Between the threat of economic sanctions from the West and simple risk-aversion-based capital flight, as one analyst noted, "uncertainty risks a further escalation in domestic capital outflow."

Ukraine's acting PM Arseniy Yatsenyuk speaks. Highlights below:

• UKRAINE TO FULFILL ALL IMF REQUIREMENTS, PREMIER SAYS - like Greece?
• UKRAINE PM SAYS BELIEVES RUSSIAN TROOPS WON'T INVADE E. UKRAINE - because they are there already?
• UKRAINE PM SEEKS TO INCREASE RESERVES TO EASE FX FLUCTUATIONS - "Whatever it takes", even printing dollars
• UKRAINE PM SAYS NAFTOGAZ SHOULD BE PRIVATIZED - Ukraine oligarchs delighted by this development
• UKRAINE PM SAYS NEW GOVERNMENT HAS NO INTENTION OF NATIONALISING PRIVATE COMPANIES" - Ukraine oligarchs even more delighted by this development

And finally, why all the above was irrelevant:

• UKRAINE PM SAYS RUSSIA REFUSES TO HOLD BILATERAL UKRAINE TALKS

Oh well, as long as it fools those USDJPY ramp algos if only for a few minutes.

• Russian markets hit as Putin tightens grip on Crimea (Reuters)
• Ukraine Sees More Russian Incursions as Standoff Worsens (BBG)
• Ukraine Crisis Roils Global Markets (WSJ)
• Cold War Ghosts Haunt East Europe in Moves for Crimea (BBG)
• How Moscow Orchestrated Events in Crimea (WSJ)
• Russia Gas Threat Shows Putin Using Pipes to Press Ukraine (BBG)
• Euro-zone PMI slowed less sharply than estimated (MW)
• Two top Microsoft execs to leave in reshuffle (Reuters)
• Soaring Luxury-Goods Prices Test Wealthy's Will to Pay (WSJ)
• IQ-Boosting Drugs Aim to Help Down Syndrome Kids Learn (BBG)

Infantry, navy, and now air force. At least according to the Ukraine, which reported that Russian fighter jets twice violated Ukraine's air space over the Black Sea during the night, Interfax news agency quoted the Defence Ministry as saying on Monday. It said Ukraine's air force had scrambled a Sukhoi SU-27 interceptor aircraft and prevented any "provocative actions" but gave no further details. That was just the cherry on top to what has already been an exhausting day for risk in Russia and the Ukraine, both of which saw their currencies tumble to all time lows.

We were perhaps even more amused than our readers by our Friday headline "Stocks Close At New Record High On Russian Invasion, GDP Decline And Pending Home Sales Miss." It appears that today the market forgot to take its lithium, and is finally focusing on the Ukraine part of the headline, at least until 3:30 pm again when everything should once again be back to market ramp normal. As expected, the PMI data from China and Europe in February, was promptly ignored and it was all about Ukraine again, where Russia sternly refuses to yield to Western demands, forcing the shocked market to retreat lower, and sending Russian stocks lower by over 11%. This is happening even as Ukraine is sending Russian gas to European consumers as normal, gas transport monopoly Ukrtransgas said on Monday. "Ukrtransgas is carrying out all its obligations, fulfilling all agreements with Gazprom. The transit (via Ukraine to Europe) totalled 200 million cubic meters as of March 1," Ukrtransgas spokesman Maksim Belyavsky said. In other words, it can easily get worse should Russia indeed use its trump card.

A look back in time helps one spot the banker propaganda about gold and silver so prevalent today.